Rising debt service costs: Public banks for tax relief
By Mike Krauss
Posted December 11, 2015
Across the United States, states and municipal governments struggle to provide essential public services, such as schools, public safety, courts and prisons, public health, transportation infrastructure and parks, while also trying to keep taxes down for a middle class burdened with taxes of every kind.
Some of those taxes are easily identified, like those on income, wages, property, sales and gas. Some are almost invisible. One of these is the tax on the money raised by the bonds that governments issue to pay for capital projects.It’s called interest, and this tax shows up in our public budgets and financial reports as “debt service,” which adds to the burden on taxpayers.
In California for example, construction of the new Bay Bridge in San Francisco was projected to cost $6 billion. But California taxpayers are also on the hook for more than $6 billion more in interest, which will be paid to investors who purchased the bonds used to raise the first $6 billion. More…